Bloomberg poll puts China's third-quarter GDP growth at 4.4%, below 2026 target

The 4.4% median estimate would be a slight improvement on the 4.3% growth recorded in the three months through June, but it would again undershoot Beijing's 2026 target of 4.5% to 5%, Moneyweb reported. Retail sales data, also due Monday, were expected to show one of the weakest readings in modern history.

The estimate comes after a stimulus package that Moneyweb described as the biggest in two years, though many observers doubt it changed the outlook much. Since late September, officials have rolled out mortgage subsidies, expanded central bank funding for sectors including technology and infrastructure, and granted $82 billion in additional spending power for provinces, the report said.

What the State Council promised on 28 September

A State Council executive meeting chaired by Premier Li Qiang on 28 September pledged "a package of practical and effective additional policies" and "stronger counter-cyclical adjustments" to achieve 2026's economic and social development goals, the Business Times reported. The statement said government bonds and local government bonds would be issued and used faster, and major projects would break ground without delay. Unused local government bond quota left from previous years will be tapped.

The central bank's relending allowance will rise to channel credit to innovation, technological upgrades, small companies and agriculture, the statement said. Policymakers will study fresh measures to stabilise the property market and to promote employment and household income. Consumption-boosting steps will keep being prepared, with implementation starting first in localities where conditions allow, Chosun Biz reported.

The delivery channels: PSL, relending and a mortgage subsidy

The People's Bank of China cut its one-year PSL rate by 25 basis points to 1.50% from 1.75%, following a similar cut in January, BofA Global Research reported. It widened PSL eligibility to the Six Networks: water, new-type power grids, computing power, next-generation communications, urban underground pipelines and logistics. The bank estimated spending across those areas could reach up to 25 trillion yuan over the next five years.

The technology relending quota rose by 200 billion yuan to 1.4 trillion yuan, and the central bank funding ratio went to 100% from 60%, BofA said. A further 500 billion yuan went to the combined agricultural and small-business relending and rediscounting quota, taking it to 4.85 trillion yuan. China also announced its first nationwide fiscal subsidy for commercial mortgages, jointly with the finance ministry and the financial regulator.

Why economists call this round incremental

BofA said the latest measures offered targeted support for investment and the property market but fell short of a strong policy pivot to lift public expectations. It said the package was much less comprehensive than the measures China unveiled in late 2024. The mortgage subsidy covers only new first-home mortgages on properties of up to 120 square metres and 1.5 million yuan in value.

BofA estimated no more than 20% to 25% of annual home transactions would qualify, with a maximum first-year fiscal cost of about 27 billion yuan. It said the subsidy's larger impact would likely come through sentiment, by lowering borrowing costs for eligible buyers. BofA said a more aggressive package is unlikely unless export growth weakens or the fiscal position deteriorates meaningfully.

August retail sales rose just 0.4% from a year earlier, and investment fell 7.2% in January to August, Chosun Biz reported. The Business Times said consumption growth missed expectations again in August and softened to near zero.

Lynn Song, chief economist for Greater China at ING Bank, said the magnitude of policies to aid housing, jobs and wages will be key to watch, the Business Times reported. Jacqueline Rong, chief China economist at BNP Paribas, said the stimulus does not need to be large because the gap to the 4.5% goal is likely modest.

The size of the growth gap

China's 2026 growth target is 4.5% to 5%, and first-half growth was 4.7%, Chosun Biz reported. Growth in the three months through June was 4.3%, and the Business Times reported that growth had likely weakened further below the lower end of the target in the third quarter. The Bloomberg median estimate of 4.4% would be a slight improvement on the second-quarter reading but still below the 4.5% floor.

Goldman Sachs chief China economist Hui Shan estimated GDP was running at about 4% year on year in the early weeks of the third quarter, down from 4.3% in the prior three months, ForexFactory reported. Moneyweb reported that a 36% jump in exports last month likely helped drive an acceleration in industrial output, forecast to rise 5.4% in September from 5.2% in August, and that fixed-asset investment was expected to fall 7.3% over the first nine months of the year, roughly on par with a 7.2% drop in January to August. Retail sales were expected to inch up 0.5% in September after a 0.4% gain in August, among the worst readings in modern history, the report said.

Michelle Lam, greater China economist at Societe Generale, wrote that without a decisive policy shift toward supporting household incomes and consumption, China is likely to remain trapped in a prolonged period of low inflation and subpar growth, Moneyweb reported. The IMF projected China's economy will slow to 4% in 2027, against a 4.9% pace achieved since 2020.

What happens next

The measures bear echoes of 2024, when GDP growth slipped below target for two straight quarters before officials stepped in, Moneyweb reported. The Business Times reported that authorities have so far refrained from adding major stimulus to bolster domestic demand, targeting industrial overcapacity and price competition instead.

Third-quarter GDP and September activity data were due on Monday. BNP Paribas's Rong said the underlying momentum is not strong enough on its own to deliver the annual target. She said additional policy support will be needed in the fourth quarter.

BofA said policymakers appeared to be taking first steps to stabilise growth while remaining relatively comfortable with aggregate demand given strong exports. Lam said the bigger challenge lies in 2027, when GDP growth may ease further to below 4.5%.